Irvine, Calif., November 1, 2012 – Lantronix, Inc. (the “company”) (NASDAQ: LTRX), a leading global provider of smart M2M connectivity solutions, today reported results for its first quarter ended September 30, 2012.
“In spite of the economic situation that continued to impact sales in Europe, we were encouraged by the ramp of new product revenues during the first quarter, and we made significant progress on our strategic plan to expand our sales and marketing efforts,” said CEO Kurt Busch. “While we continue to closely manage our expenses in alignment with fluctuating market conditions, our focus in the current fiscal year continues to be on executing our growth strategy to become the leading provider of secure, feature rich and simple to deploy machine to machine solutions.”
Financial Results for the First Quarter of Fiscal 2013 Ended September 30, 2012
Net revenue was $11.2 million for the first quarter of fiscal 2013, an increase of $18,000, compared to $11.2 million for the first quarter of fiscal 2012 and a decrease of $0.4 million or 4%, compared to $11.6 million for the fourth quarter of fiscal 2012.
Net revenue from embedded device enablement products in the first quarter of fiscal 2013 was $5.8 million, or 52% of net revenue, compared to $5.5 million, or 49% of net revenue, in the first quarter of fiscal 2012, an increase of $0.3 million, or 6%. Net revenue from external device enablement products was $3.3 million, or 29% of net revenue, in the first quarter of fiscal 2013 compared to $3.3 million, or 29% of net revenue, in the first quarter of fiscal 2012, a decrease of $11,000, or less than 1%. Net revenue from device management products was $2.1 million, or 19% of net revenue, in the first quarter of fiscal 2013 compared to $2.4 million, or 22% of net revenue, in the first quarter of fiscal 2012, a decrease of $0.3 million, or 12%.
Net revenue in the Americas was $6.0 million in the first quarter of fiscal 2013, compared to $5.7 million in the first fiscal quarter of 2012, an increase of $0.3 million, or 5%. Net revenue in the Asia Pacific region was $2.2 million in the first quarter of fiscal 2013 compared to $2.0 million in the first quarter of fiscal 2012, an increase of $0.2 million, or 9%. Net revenue in the EMEA region (Europe, Middle East and Africa) was $3.1 million in the first quarter of fiscal 2013, compared to $3.5 million in the first fiscal quarter of 2012, a decrease of $0.4 million, or 13%.
Gross profit as a percentage of net revenue (“gross margin”) was 48.8% for the first quarter of fiscal 2013, compared to 47.4% for the first quarter of fiscal 2012 and 50.7% for the fourth quarter of fiscal 2012.
GAAP operating expenses for the first quarter of fiscal 2013 were $5.9 million, a decrease of $0.8 million or 12%, compared to $6.7 million for the first quarter of fiscal 2012 and a decrease of $0.1 million or 2%, compared to $6.0 million for the fourth quarter of fiscal 2012.
Non-GAAP operating expenses for the first quarter of fiscal 2013 were $5.5 million, a decrease of $0.6 million or 9%, compared with $6.1 million for the first quarter of fiscal 2012, and a decrease of $0.1 million or 2%, compared to $5.7 million for the fourth quarter of fiscal 2012.
GAAP net loss for the first quarter of fiscal 2013 was $(430,000), or ($0.03) per share, compared to a GAAP net loss of $(1.4 million), or ($0.14) per share, for the first quarter of fiscal 2012 and a GAAP net loss of $(178,000), or ($0.01) per share, for the fourth quarter of fiscal 2012.
Non-GAAP net income for the first quarter of fiscal 2013 was $48,000, or $0.00 per share compared to non-GAAP net loss of $(697,000) or $(0.07) per share for the first quarter of fiscal 2012 and non-GAAP net income of $351,000, or $0.03 per share, for the fourth quarter of fiscal 2012.
Balance Sheet Summary
Cash and cash equivalents were $10.5 million as of September 30, 2012, compared to $11.4 million as of June 30, 2012.
Accounts receivable were $2.2 million as of September 30, 2012, compared to $2.7 million as of June 30, 2012.
Net inventories were $7.7 million as of September 30, 2012, compared to $6.0 million as of June 30, 2012.
Accounts payable were $4.8 million as of September 30, 2012, compared to $3.6 million as of June 30, 2012.
Working capital was $11.6 million as of September 30, 2012, compared to $11.9 million as of June 30, 2012.
Discussion of Non-GAAP Financial Measures
Lantronix believes that the presentation of non-GAAP financial information, when presented in conjunction with the corresponding GAAP measures, provides important supplemental information to management and investors regarding financial and business trends relating to the Company’s financial condition and results of operations. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. Management believes that non-GAAP operating expenses, non-GAAP net income (loss) and non-GAAP net income (loss) per share are important measures of the Company’s business. Management uses the aforementioned non-GAAP measures to monitor and evaluate ongoing operating results and trends to gain an understanding of our comparative operating performance.
Non-GAAP operating expenses consist of operating expenses excluding (i) share-based compensation and related payroll taxes, (ii) depreciation and amortization, (iii) costs associated with the 2011 independent investigation of certain allegations by a director of Lantronix, and (iv) consulting fees for former named executive officers.
Non-GAAP net income (loss) consists of net income (loss) excluding (i) non-GAAP adjustments to operating expenses, (ii) interest income (expense), (iii) other income (expense), and (iv) income tax provision (benefit).
Non-GAAP net income (loss) per share is calculated by dividing non-GAAP net income (loss) by non-GAAP weighted-average shares outstanding (diluted). For purposes of calculating non-GAAP net income (loss) per share, the calculation of GAAP weighted-average shares outstanding (diluted) is adjusted to exclude share-based compensation, which for GAAP purposes is treated as proceeds assumed to be used to repurchase shares under the GAAP treasury stock method.
Conference Call and Webcast
Lantronix will host a conference call and webcast today at 2:00 p.m. Pacific Time (5:00 p.m. ET) to discuss its first quarter fiscal year 2013 financial results. Those wishing to participate in the live call should dial 866-788-0547 (international dial-in 857-350-1685) using the passcode 38014979. A telephone replay of the call will be available through November 8, 2012 by dialing (888) 286-8010 (international dial-in 617-801-6888) and entering passcode 59543811.
Lantronix, Inc. (NASDAQ: LTRX) is a global leader of secure communication technologies that simplify access and communication with and between virtually any electronic device. Our smart connectivity solutions enable sharing data between devices and applications to empower businesses to make better decisions based on real-time information, and gain a competitive advantage by generating new revenue streams, improving productivity and increasing efficiency and profitability. Easy to integrate and deploy, Lantronix products remotely and securely connect electronic equipment via networks and the Internet. Founded in 1989, Lantronix serves some of the largest medical, security, industrial and building automation, transportation, retail/POS, financial, government, consumer electronics/appliances, IT/data center and pro-AV/signage entities in the world. The company’s headquarters are located in Irvine, California.
This news release contains forward-looking statements, including statements concerning our future business plans, future financial position, future results of operations and future product development strategies and schedules. These forward-looking statements are based on current management expectations and are subject to risks and uncertainties that could cause actual reported results and outcomes to differ materially from those expressed in the forward-looking statements. Factors that could cause our expectations and reported results to vary, include, but are not limited to: final accounting adjustments and results; quarterly fluctuations in operating results; our ability to identify and profitably develop new products that will be attractive to our target markets, including products in our device networking business and the timing and success of new product introductions; changing market conditions and competitive landscape; market acceptance of our products by our customers; pricing trends; actions by competitors; future revenues and margins; changes in the cost or availability of critical components; unusual or unexpected expenses; and cash usage including cash used for product development or strategic transactions; and other factors that may affect financial performance. For a more detailed discussion of these and other risks and uncertainties, see our Annual Report on Form 10-K for the year ended June 30, 2012 and subsequent Reports on Forms 10-Q and 8-K. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the Company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances. If the Company does update or correct one or more of these forward-looking statements, investors and others should not conclude that the Company will make additional updates or corrections.
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Investor Relations Contacts:
Chief Financial Officer
E.E. Wang Lukowski
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